First-year premiums (FYPs) generated by the nation’s life insurers continued falling in August, plunging 40 percent annually to NT$47.7 billion (US$1.64 billion), due to new rules restricting firms from offering unrealistically high bonuses to policyholders, a Life Insurance Association’s report last month showed.
It was the eighth consecutive month that insurers’ combined FYPs declined year-on-year, the data showed.
The Financial Supervisory Commission in July implemented a new rule requiring life insurers to set declared interest rates based on fixed-income investments, meaning lower bonus payments for customers, the agency said.
The commission in July lowered life insurance companies’ liability reserve interest rates on all policies denominated in New Taiwan and US dollars by 25 and 50 basis points respectively to keep them in line with market rates.
As a decrease in the liability reserve interest rate led life insurers to raise premiums for new policies, insurance products became more expensive, which also affected sales, the agency said.
A low interest rate environment, volatility in global financial markets and canceled marketing events were also a drag on sales of investment-linked insurance policies (ILPs), the agency said.
Among life insurance policies, which led all products with FYPs, making up 90 percent, traditional products’ first-year premiums retreated 46 percent year-on-year to NT$26 billion in August, while those of ILPs fell by half annually to NT$7 billion, the data showed.
For the first eight months, FYPs of traditional life insurance products fell 33 percent to NT$372 billion, while those of ILPs decreased 45 percent to NT$67 billion, the agency said.
Sales of the annuity policies and injury insurance products declined annually by 19 percent and 8 percent respectively during the January-to-August period, the agency said.
By comparison, health insurance policies’ cumulative FYPs grew 11 percent to NT$29 billion for the first eight months, as consumers became more concerned about their health insurance coverage amid the COVID-19 pandemic, the association said.
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